Production Begins at Shah Deniz gas condensate field in the Caspian Sea

15 December

BP, as the operator of the Shah Deniz gas condensate development project, and Statoil, as commercial operator of the South Caucasus Pipeline Company, today announced the start-up of commercial gas production from the field and start-up of operations of the South Caucasus Pipeline.

This marks the start of Stage 1 of the development of Shah Deniz, which is in the Azerbaijan sector of the Caspian Sea and will deliver gas to markets in Azerbaijan, Georgia and Turkey. 

The parties to the Shah Deniz Exploration, Development and Production Sharing Agreement (EDPSA) are: BP (operator – 25,5%), Statoil (25,5%), the State Oil Company of the Azerbaijan Republic (SOCAR – 10%), LUKoil (10%), NICO (10%), Total (10%), and TPAO (9%). 

The South Caucasus Pipeline (SCP) routed through Azerbaijan and Georgia links the Shah Deniz field to Turkey. Commissioning of the pipeline was completed this month and it was successfully tied-in with the Turkish pipeline system at the Georgian – Turkish border. The SCP has a dual operatorship with BP as the Technical Operator being responsible for construction and operation of the SCP facilities. Statoil, as Commercial Operator, is responsible for SCP's business development and administration. 

The investors to the South Caucasus Pipeline Company are: BP (Technical Operator – 25,5%), Statoil (Commercial Operator 25,5%), Azerbaijan SCP Ltd. (10%), LUKoil (10%), NICO (10%), Total (10%), and TPAO (9%). The Ministry of Industry and Energy of the Azerbaijan Republic is a non-funding shareholder. 

Production from Shah Deniz will increase through 2007 as the remaining three pre-drilled wells are brought online, and will be followed by further field development with wells drilled from the platform. Plateau production from Stage 1 will be 8.6 billion cubic meters of gas per annum. 
Bill Schrader, BP’s President in Azerbaijan, said: 

"The start up of Shah Deniz is an important milestone. Over 5000 people have been involved in the design, fabrication, construction, transportation and hook up and commissioning. My thanks go to this team, the government of Azerbaijan, our partners and our contractors and suppliers all of whom have played a key role in delivering this project." 

Notes to Editors:
The Shah Deniz Stage 1 project, which was sanctioned in February 2003, includes both an upstream and a midstream development. The Upstream project comprises a 15 well-slot TPG 500 type production, drilling and quarters platform which is installed in 105 m water depth; three sub-sea pipelines of 90 km each -- a 26" pipeline for gas and a 12" pipeline for condensate, and a 4" mono ethylene glycol (MEG) pipeline – from the TPG 500 to the Sangachal Terminal; and gas and condensate processing facilities in the onshore terminal. 

The Midstream project comprises a new gas export system - the South Caucasus Pipeline (SCP) - from Azerbaijan through Georgia to the Turkish border. SCP is a pipeline 690 kilometres in length (442 km in Azerbaijan and 248 km in Georgia), which has been constructed in the same corridor as the Baku-Tbilisi-Ceyhan (BTC) oil export pipeline in order to minimise the environmental and social impact. The pipeline diameter is 42". 

Further information:
Tamam Bayatly at BP’s Press Office in Baku, telephone: 994 (0) 12 599 4557